The Lottery Ripped Me Off!

Breakage: dropping Aunt Ethel’s antique vase, or marketing strategy?

Both, actually. In marketing terms, breakage means issuing a coupon to lure customers, knowing some of them will forget the coupon and pay full price.

The difference between the expected discounted price and the price actually paid is called breakage.

The folks at Bed, Bath & Beyond build breakage into their business model. They regularly send out coupons, typically for 20% off one item, hoping they’ll encourage us to buy several things. Customers pay full price for the extra stuff, and if someone forgets the coupon…even better.

We shop at BB&B, but I save all their coupons…even the expired ones. Because here’s some little-known facts about BB&B:

1)     They honor coupons regardless of expiration dates

2)     They’ll accept one for each item you buy

3)     They’ll credit you retroactively (up to 30 days) if you forgot coupons when shopping

In other words, they don’t care about breakage. Their coupons work, promoting sales and encouraging repeat purchases.

Now an admission: I buy lottery scratch-off cards, seeing them as cheap entertainment.

Recently I won $2 on a card that oddsmakers said I’d lose 37¢ on. When I tried cashing it in, I was told the game had expired. Despite no expiration date on the card, I was stuck for the two bucks.

GRRRRR!

The lottery and BB&B are both selling something, but they handle it very differently. Both have expiration dates for their programs, but one recognizes they’ll create better customer relations by ignoring those deadlines.

The other barely acknowledges their deadlines, but punishes anyone missing them. It’s sneaky, antagonistic, and not likely to encourage future sales…at least from this consumer.

Coupons can be a great way to promote your sales. A promoted expiration date can push customers to buy within a specific timeline.

But irritating customers is certain to have the opposite effect. And if word gets around about this sort of thing, it might even have a negative impact on your revenues.

Which probably isn’t part of your marketing plan.

And to all the Sacramento bureaucrats thinking stiffing customers out of their legitimate winnings is a great way to hang onto lottery proceeds, consider how you’d feel if someone did this to your child. 

With that said, I wish you a week of profitable marketing.

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